As the new academic year begins, many students are bracing themselves for the financial challenges of higher education. Recent changes brought by the One Big Beautiful Bill Act, signed by President Donald Trump, may impact their borrowing capacity.
Historically, graduate students had access to two federal loan options: Direct Unsubsidized Loans with a cap of $138,500, and Grad PLUS loans, which allowed borrowing up to the full cost of attendance after financial aid. However, the Grad PLUS loans will be phased out next summer, offering a three-year transition for existing borrowers.
New borrowing limits will cap lifetime loans for certain professional degrees at $200,000 and $100,000 for nonprofessional programs. Cumulatively, the lifetime limit for undergraduate and graduate loans will be $257,500 per individual.
Given the average costs of higher education, these new limits present challenges. For instance, a bachelor’s degree can cost between $24,920 at public universities and $58,000 at private institutions annually. Law and medical school costs further exacerbate the financial burden, with potential expenses reaching up to $168,000 for law school and $363,000 for medical school.
Reflecting on these figures, many, like college professor Rodney Coates, acknowledge that such limits could have hindered their educational achievements. Coates, who accumulated nearly $300,000 in student loans, repaid them within a decade, showcasing that the previous system worked for some.
The Future of Professional Students
Graduates from professional programs often carry significant debt, exceeding the new caps. In 2020, over 25% of medical students and nearly 60% of dental students borrowed more than the proposed limits, according to student loan expert Mark Kantrowitz (source). Data from 2024 shows that about a quarter of medical graduates had debts surpassing $300,000.
Minority students, particularly Black students, may feel the constraints more. While 61% of all graduate students rely on loans, a larger percentage of Black students do compared to their white counterparts.
With federal loan limits, students might turn to private loans, often with less favorable terms. This could force some students to abandon their education prematurely, exacerbating the shortage of Black doctors. A 2023 report from the Journal of the American Medical Association links this shortage to poorer health and higher mortality rates in Black communities. As of 2023, only 6% of U.S. doctors were Black, though they represent 14.4% of the population.
Research indicates that easing student loan burdens could diversify the medical field. Conversely, stricter borrowing limits might reduce diversity and negatively impact Black public health.
In legal education, costs have surged over 600% in 20 years, with the average 2020 graduate carrying $165,000 in debt. Black law graduates face unique challenges, including higher debt and wage disparities. The percentage of Black attorneys remains around 5%.
Women, who account for two-thirds of student debt, may also face disproportionate impacts due to reduced access to federal loans.
Anticipating Changes
Some proponents argue that capping borrowing will prompt universities to control tuition increases and that private lenders will fill the gap. The real impact will be clearer next year.
Students should explore the myriad of scholarship opportunities available. Many organizations offer scholarships for medical students, especially for women and minorities. Law students can also find numerous scholarships, including those for women and people of color.
